The European Commission has found that a Polish tax on the retail sector is in breach of EU state aid rules.
The Commission concluded that the progressive tax rates based on turnover give companies with low turnover an advantage over their competitors. Following a complaint, the Commission opened an in-depth investigation in September 2016 into the measure. Poland did not collect this new tax and, as a result, no State aid was effectively granted. Consequently, there is no need for recovery in this case.
The Commission does not question Poland's right to decide on its taxation systems or on the objective of different taxes and levies. However, the tax system must comply with EU law, including State aid rules, and cannot unduly favour certain companies over others.
The Commission's investigation has shown that with this progressive tax rate structure, smaller companies would either pay no retail tax at all or face a lower average tax rate than larger competitors. This would give companies with a lower turnover an unfair economic advantage. Smaller companies should of course pay less tax than their larger competitors in absolute terms, but still in the same proportion to their turnover.
Poland has not demonstrated that the progressivity of the retail tax was justified by the objective of the retail tax to raise revenues, or that companies subject to the higher rates would have a higher ability to pay.
Today's decision requires Poland to remove the unjustified discrimination between companies under the retail tax and restore equal treatment in the market. A full press release is available online in English, French, German and Polish.
- Publication date
- 30 June 2017
- Directorate-General for Taxation and Customs Union